In today’s briefing:
- Xiaomi(1810.HK): Huawei’s Restrictions (Another) Signal of More to Come
- SONY (6758) | Re-Acceleration of Growth in Games
- KakaoBank- The Only One
- Kyocera (6971 JP): Massive Downward Revision
- Meta Platforms 4Q22: Zuckerberg Got Religion?
- Z Holdings (Neutral) – Q3 22 Results Reaction: Lofty EBITDA Targets Cut on Erosion in Core Business
- Praj Industries: Today’s Unimaginable Is Tomorrows Conventional Wisdom
- Takeda: Top Line Beats Consensus, Steady Pipeline Progress and Further Upside
- China Shineway Pharmaceutical (2877.HK) – Some Points Worth the Attention
- KDDI (Buy) – Q3 22 Results Reaction: Super Mobile but Full-Year Targets Look Challenging
Xiaomi(1810.HK): Huawei’s Restrictions (Another) Signal of More to Come
- Likely new 4G restrictions will delay Huawei’s ability to launch mid-range offerings at volume. Xiaomi stands to gain 1.2ppts of share in 2024 vs. our prior forecast.
- However, new limits are long-term negative, as it (1) raises the chance for cascading limits on China 3Cs; (2) triggers reduced 3C electronics demand; (3) weaker industry electronics demand.
- The impact of the latest set of restrictions will likely prove net negative, in our view, as a result we re-iterate our SELL rating and HK$7.3 TP.
SONY (6758) | Re-Acceleration of Growth in Games
- Sony’s Q3 operating profit fell 8% YoY to Y428b beating consensus estimates by around 15%
- The PS5 has now sold over 32m units, finally shaking off supply constraints. Will VR2 surprise?
- We remain bullish on the stock at 15x earnings. Sony is a core play on content creation and digitization.
KakaoBank- The Only One
- There is only one large, liquid, listed, internet bank in all of the Asia-Pacific markets
- Earnings have been strong, with uplift in NIM and loan balance to support this
- Regulatory change to provisioning not likely to affect this bank, but big peers
Kyocera (6971 JP): Massive Downward Revision
- Kyocera cut FY Mar-23 operating profit guidance by more than 30% while leaving sales guidance unchanged. Draw your own conclusions about the reliability of company forecasts.
- Sales began to decline in 3Q and the rate of decline is likely to increase in 4Q. There is a large inventory overhang.
- The shares dropped 3% today. Wait for capitulation as the reality of recession sinks in.
Meta Platforms 4Q22: Zuckerberg Got Religion?
- Meta lowered 2023 expense guide by $5B (or 5%) to $89bn-$95bn and capex guide by $4B (or 11%) to $30bn-$33bn
- Metaverse spending continues, META lost $4.3B on $700M in revenue this quarter and losses are expected to accelerate in 2023.
- Zuck said the word efficiency 18x and AI 15x…Evidently, these are his priorities!
Z Holdings (Neutral) – Q3 22 Results Reaction: Lofty EBITDA Targets Cut on Erosion in Core Business
- Management has cut its FY23 EBITDA target from its long-term goal of ¥390bn to c. ¥363bn as its core ad and eCommerce performance gets weaker
- Advertising revenue fell 1% YoY whilst eCommerce volumes (GTV) on the core third-party marketplace Yahoo!Shopping were also down significantly
- The outlook for FY23 is further blurred by management changes to address business challenges and deeper LINE/Yahoo integration. We are lowering our target price to ¥425
Praj Industries: Today’s Unimaginable Is Tomorrows Conventional Wisdom
- Robust medium-term earnings growth, softness in commodities to ease margin pressure.
- Beneficiary of new energy capex, likely blending of Compressed Biogas with CNG furthers capex outlook.
- Stock has corrected 45% from peak, valuations turn more reasonable.
Takeda: Top Line Beats Consensus, Steady Pipeline Progress and Further Upside
- Takeda Pharmaceutical (4502 JP) reported 3QFY03/2023 results today. Reported revenue increased 11.2% YoY to JPY1,096.6bn (vs consensus JPY996bn) while OP increased 26.2% YoY to JPY147bn (vs consensus JPY180.1).
- The drop in OP vs consensus was mainly due to the depreciation of the Yen, nevertheless, OPM improved 30bps to 13.4% during the quarter.
- Takeda has not revised full-year forecast, however, we think the company will easily beat its own guidance as it pushes forward with its development pipeline further aided by M&A.
China Shineway Pharmaceutical (2877.HK) – Some Points Worth the Attention
- Shineway released good turnover data in 22Q1-Q3. Due to large market demand for COVID-related TCM, 22Q4 performance would remain strong growth momentum, leading to positive outlook of 2022 annual report.
- With the peak of respiratory disease outbreak past and COVID-19 also begins to be under control, demand for related TCM would weaken. Accordingly, the pullback of share price could begin.
- Strong performance of Shineway’s share price may not be sustainable in long term. Shineway is no longer cheap at current valuation. While short-term catalysts remain, future upside may become limited.
KDDI (Buy) – Q3 22 Results Reaction: Super Mobile but Full-Year Targets Look Challenging
- Core mobile revenue fell 4% but that is an improvement from 7-8% declines over the last few quarters and including value-added sales (VAS), retail mobile spend is up
- Competitive challenges remain with elevated churn and visible declines in roaming revenue from Rakuten (although sequential change has been modest)
- KDDI has kept guidance for FY22 operating income growth unchanged despite unanticipated expenses for rising fuel costs and the July network failure
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Data and News
- ✓ Events & Webinars
